Environmental Challenges 9 (2022) 100632

Contents lists available at ScienceDirect

Environmental Challenges
journal homepage: www.elsevier.com/locate/envc

The governance structure on the role of internal auditors in environmental

auditing practices: Cases of Malaysian local organisations
Muthyaah Mohd Jamil a,∗, Nor Hafizah Zainal Abidin b, Norhayati Mohd Alwi b
a
Faculty of Accountancy, University Technologi MARA, Selangor Campus, Malaysia
b
Department of Accounting, Kulliyyah Economic and Management Sciences, International Islamic University of Malaysia, Kuala Lumpur, Malaysia

a r t i c l e i n f o a b s t r a c t

Keywords: This study investigates how governance structures’ internal auditors play their roles in environmental auditing
Internal auditors practices. This study used interpretative research focusing on multiple case studies: two Malaysian Local Govern-
Environmental auditing ments with single-case design and environmental auditing. This study utilised three methods of data collection:
Qualitative study
document analysis, observations and interviews. This study used thematic analysis using Atlas.Ti software. This
Role theory
study concludes that governance structures such as NGO Watchdog Group, independence of the internal au-
Malaysian local governments
dit department, tenure of Chairman, multiple functions and review meetings influence the roles of the internal
audit department. This study explores the environmental auditing practices using expectation development by
Role Theory to illustrate the process of environmental auditing practices. The findings outline how to construct
environmental auditing practices and improve the effectiveness of the practices in government organisations.

1. Introduction
Malaysian Local Governments (MLGs) must establish their internal
audit department (Perbendaharaan Malaysia, 2013). The internal au-
dit department performs an independent function in an organisation.
Meanwhile, the National Audit Department is an external auditor for an
organisation (Perbendaharaan Malaysia, 2003). Monitoring the imple-
mentation of environmental programmes and activities has remained
a prominent concern for the organisation mainly because poor moni-
toring of environmental programmes may lead to severe environmental
damage.
Environmental auditing of environmental programmes and compli-
ance is mandatory for ISO 14001-certified organisations (SIRIM, 2017).
Hence, the environmental auditing practices in a certified ISO 14001
would differ from that of a non-organisation, which is untapped in past
studies. Therefore, this study will explore the differences by comparing
environmental auditing practices between certified and non-certified
MLGs. Notwithstanding various guidelines and standards on ecological
auditing practices, the absence of a directive from the higher author-
ity has disregarded a uniform standard for MLGs and led to many EAP
formats (Buang, 2007).
Internal auditors play crucial roles in the implementation of eco-
logical auditing practices amongst MLGs. A comprehensive discussion
is taking place about the role of internal auditors, from assurance to
providing consultancy. The construction of the role of internal audi-
tors depends on the organisation’s governance structure (Buang, 2007).
Therefore, this study would like to explore how governance structure
influences the environmental auditing practices in MLGs.
The MLG has unique features that differ in structure and regulation
(Perbendaharaan Malaysia, 2013). The regulations for the MLGs are dif-
ferent because they are based on the regulations from the state govern-
ment and specific local enactments. Due to different regulations, the
governance structure may also differ. The results of this study may shed
some light on the unique governance structure that influences the im-
plementation of environmental auditing practices in Malaysia.
The remainder of the paper proceeds as follows. The next sec-
tion discusses the theoretical lens of environmental auditing practices
and the expectation enactment model. The section after that discusses
the methodology of the case. The two case studies are produced in
Section 4 to illustrate the process. Section 5 identifies the most visible
commonalities and differences for each stage of environmental auditing
practices. The concluding remark unveils which and why particular en-
vironmental auditing practices are more comprehensive and concludes
the discussion with recommendations for further research.
2. Literature review
The role of internal auditors has evolved from assessing the risks of
financial statement audits to ensuring the credibility of the environmen-
tal management system. The interpretation of the roles of internal au-
ditors has emerged, and the discussion on internal auditors has become
wider, ranging from supervision, prevention, protection and evaluation

∗
Corresponding author.
E-mail address: muthyaah@uitm.edu.my (M.M. Jamil).

https://doi.org/10.1016/j.envc.2022.100632
Received 16 July 2022; Received in revised form 25 September 2022; Accepted 6 October 2022
2667-0100/© 2022 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/)
M.M. Jamil, N.H.Z. Abidin and N.M. Alwi
to consultancy (Chambers & Odar, 2015; Lenz & Sarens, 2012; Onumah
& Krah, 2012). Generally, internal control aims to ensure that the or-
ganisation is managed efficiently and economically.
Most studies highlighted that governance influences the roles of in-
ternal auditors (Mihret et al., 2010; Woldeyohannis & Mihret, 2008;
Yismaw & Mihret, 2007). Governance’s criteria include organisational
settings (Asaolu et al., 2016; Axelsen et al., 2017; Christopher, 2014;
Onumah & Krah, 2012; Woldeyohannis & Mihret, 2008), manage-
ment support (Christopher, 2014; Onumah & Krah, 2012; Usang &
Salim, 2016), auditee attributes (Onumah & Krah, 2012) and internal
audit quality (Christopher, 2014; Onumah & Krah, 2012).
The organisational setting, which highlights the situational back-
ground of an organisation, is characterised by three factors: organisa-
tional structure, the highest authority and budget allocation. The first
factor is the organisational structure, which consists of hierarchy, regu-
lation and audit authority of the organisation, all of which have weigh-
tage to the role of internal auditors in performing their duties (Mihret
et al., 2010; Morin & Hazgui, 2016). Internal auditors have the freedom
to audit various programmes if the top management authorised them
to do so (Asaolu et al., 2016; Bananuka et al., 2018; Schyf, 2000). In
line with this, this study examines how the top management’s authority
influences the role of internal auditors in EAP.
The second factor is the highest authority of the MLGs, which is
the Audit Committee. Previous studies stated that internal auditors per-
formed an assured role for the audit committees (Bananuka et al., 2018;
Onumah & Krah, 2012; Schyf, 2000). A clear reporting framework for an
organisation enables internal auditors to perform their responsibilities.
Other studies concluded that the auditees perceived that the audit com-
mittee did not influence the role of internal auditors (Bananuka et al.,
2018; Schyf, 2000). The auditees further debated that the audit commit-
tees were not clear about the importance of the roles of internal auditors
in the organisation because the concept of the audit committee was rela-
tively new in public organisations (Bananuka et al., 2018). Therefore, no
established guideline is present for the audit committee to understand
the roles of internal auditors in a public organisation. This study ex-
pands this discussion by focusing on how the audit committee perceives
the roles of internal auditors in EAP.
The last factor is budget allocation. Several studies stated that the
lack of budget contributes to the inefficiency of service delivery by the
internal auditors (Asaolu et al., 2016; Onumah & Krah, 2012; Usang
& Salim, 2016; Schyf, 2000). Both perspectives agreed that the internal
audit department requires a reasonable budget to perform its duties. The
reasonable budget depends on how the top management perceives the
importance of the internal auditing exercise. As no discussion has been
found on how budget allocation influences the EAP, this study looks
into how the budget affects the EAP in MLGs. This study also explores
how organisational settings, such as organisational structure and budget
allocation, influence the EAP.
Management support is one of the components of governance. Pre-
vious studies concluded that management support inevitably influ-
ences the role of internal auditors in a public organisation through
the acceptance of the internal auditors’ reports (Asaolu et al., 2016;
Baber, 1983; Gupta & Ray, 1992; Onumah & Krah, 2012; Schyf, 2000;
Usang & Salim, 2016; Xiangdong, 1997), the top management tenure
(Schyf, 2000) and the resources provided by the top management
(Asaolu et al., 2016).
Both perspectives agreed that the management perceived the impor-
tance of the role of internal auditors by accepting the published re-
ports (Asaolu et al., 2016; Baber, 1983; Gupta & Ray, 1992; Onumah
& Krah, 2012; Schyf, 2000; Usang & Salim, 2016; Xiangdong, 1997).
These studies argued that the management implementing the sugges-
tions in the published reports shows that the management perceived
the essential roles of internal auditors.
A study by Asaolu et al. (2016) further extends the discussion by stat-
ing that the management recognises the critical role of internal auditors
when the top management provides the internal auditors with resources
2
Environmental Challenges 9 (2022) 100632
to perform the audit process. The organisational resources include the
budget allocation for training and the usage of the assets. The top man-
agement authorises the internal auditors to utilise their roles fully by
allowing them to use the organisational resources.
The internal auditors cannot fully utilise the resources if there are
frequent changes in the top management. According to Schyf (2000),
frequent changes in top management lead to underutilising the internal
auditors’ roles in an organisation. Each top management has its own
goal in managing an organisation. If there is a frequent change in top
management, the roles of the internal auditors also change based on the
goals set up by the top management. Therefore, this study examines how
the top management supports the roles of internal auditors in EAP.
On the other hand, auditee attributes signify the characteristics of the
auditee towards the role of internal auditors. The opinions of internal
auditors and auditees seemed to differ concerning auditees’ attributes
influencing the roles of internal auditors (Onumah & Krah, 2012; Usang
& Salim, 2016; Yismaw & Mihret, 2007).
Internal auditors perceived that auditees’ attitudes influenced their
roles (Onumah & Krah, 2012; Usang & Salim, 2016). To illustrate this
point, the practice of reminding about the internal auditors’ positions
by the auditees, such as the management, is naturally a threat to inter-
nal auditors and may limit the internal auditors’ roles while performing
an internal audit. Consequently, the internal auditors do not have the
freedom to give an independent opinion when reporting to the audit
committees or the management of public organisations.
However, Yismaw and Mihret (2007) revealed different findings
about the auditees’ point of view. The auditees claimed that their at-
tributes did not influence the roles of internal auditors in Ethiopian uni-
versities, and they accepted the judgement given by the internal audi-
tors. They admitted that they did not maintain a proper filing for the
documentation that would qualify the internal auditors to give their
judgement. Therefore, how the auditees’ attributes trigger the role of
internal auditors in EAP is also explored in this study.
Internal audit quality is related to the features of governance that
help internal auditors to perform their roles. The inefficient roles of in-
ternal auditors were due to the lack of proper training for the internal
auditors, especially in exercising internal audit regulations (Onumah
& Krah, 2012; Usang & Salim, 2016). The internal auditors proposed
broader training coverage about auditing procedures. They believed
that this would help them perform extensive audit procedures. After
all, education and proficiency are the features of internal audit qua-
lity.
Internal auditors and auditees agreed that the education and profi-
ciency of the internal auditors influence the outcome of the audit process
(Asaolu et al., 2016; Christopher, 2014; Onumah & Krah, 2012). The in-
ternal auditors with professional qualifications were able to perform a
value-added audit for public organisations. Due to this argument, how
internal audit quality influences the internal auditors’ roles in EAP is
investigated in this study.
This study utilised the Expectation Development Model from Role
Theory to illustrate how governance differs in environmental auditing
implemented in the MLGs. This model is derived from a functional role
perspective, which is the guiding principle in discussing the differences
in practices, especially on how the actors played their roles in these
practices. This perspective defines roles as a set of expectations influ-
enced by a social system (Biddle, 1986; Lynch, 2007; Mantere, 2008;
Walker, 2017; Wittmayer et al., 2017). The social system is the norms,
behaviour and characteristics of the members of society.
This present study provides a detailed explanation of EAP implemen-
tation from organisational perspectives. Prior studies have delineated
the practices that facilitate organisations to implement EAP because
each organisation has its administrative structure (Bae & Seol, 2006;
Byington & Campbell, 1997; Campbell & Byington, 1998; Earnhart &
Leonard, 2013; Evans et al., 2011; Simon et al., 2014). The review sug-
gests that the EAP in organisations may differ, although derived from
the same industry.
M.M. Jamil, N.H.Z. Abidin and N.M. Alwi Environmental Challenges 9 (2022) 100632

This study adopts the Expectation Enactment Model proposed by Table 1

Fondas (1994), which has four determinants in deriving expectations: List of Interview Session.
role senders, characteristics of the focal person, and attributes of the Recorded
relationship between the focal person and role senders, to interpret the No Position Date Duration (Y/N)
findings. This model explains the importance of individual roles in an or-
ALPHA
ganisation (Wittmayer et al., 2017), emphasising the role-playing mech- 1 Head of Internal 23 October 2014 60 minutes N
anism, where the actors individually receive and execute their roles to 2 Auditor 23 September 30 minutes Y
meet organisational goals. The effect of the organisation depends on the 2016
3 Auditee 1 27 December 2017 35 minutes Y
role set-focal person relationship.
4 22 December 2018 30 minutes N
This current study focuses more on the characteristic of the sender’s 5 Auditee 2 27 December 2017 95 minutes Y
role, which is how the instruction of the environmental auditing prac- 6 Auditee 3 27 December 2017 45 minutes Y
tices is carried out through the process. The leading player in environ- 7 Internal Auditor 1 27 December 2017 45 minutes Y
mental auditing practices is the auditors. This model is suitable for elab- 8 Auditee 4 23 February 2018 30 minutes Y
9 Internal Auditor 2 23 February 2018 30 minutes Y
orating how the leading player plays their roles in completing the envi-
10 Auditee 5 23 February 2018 30 minutes Y
ronmental auditing practices. It is relevant in explaining the features of 11 Auditee 6 23 February 2018 30 minutes Y
each role as the agent of compliance (Wittmayer et al., 2017), mainly 12 Internal Auditor 3 23 February 2018 30 minutes Y
because the actors use their distinctive parts in the organisation. 13 Councillor 22 December 2017 30 minutes Y
14 Auditee 6 22 December 2017 15 minutes N
Fondas (1994) elaborates that authority and distance refer to dele-
15 Auditee 7 23 February 2018 30 minutes Y
gating authority. This situation refers to how the authority of any pro- BETA
cess is delegated to the players of the process. The study argued that the 16 Head of Internal 22 March 2017 90 minutes Y
primary player for any practice should be able to provide resources and Auditor
help the team in managerial studies. The study also discusses that the 17 Internal Auditor 4 22 March 2017 60 minutes Y
18 Internal Auditor 5 27 March 2017 30 minutes Y
manager should play different roles in managing the business, known
19 Auditee 8 23 March 2017 30 minutes Y
as the role set of diversities. The different backgrounds of the team and 20 Auditee 9 27 March 2017 60 minutes Y
expectations facilitate the new transformation that took the play, mem- 21 Auditee 10 27 March 2017 60 minutes Y
ber variability. The last characteristic is expectation strategies, which 22 Audit Committee 1 13 December 2017 75 minutes Y
23 Audit Committee 2 27 January 2018 75 minutes Y
may require the initiated expectation when it is weak. The expectation
24 Audit Committee 3 27 January 2018 45 minutes Y
is created by the role sender as part of their objectives.

3. Methodology

The interpretative case study research involves in-depth exploration
of particular facts, events or processes in the context of one or more
interviewees (Hartley, 2004). This present study adopted the interpre-
tative case study as its research design. This study used holistic/single
unit analysis with multiple case designs to highlight the variances of
the internal auditors’ performance of roles in EAP in the two MLGs.
This study sent 22 letters to all the MLG in Peninsular Malaysia.
Only two MLGs were permitted to collect in-depth data within the
organisation.
The data were gathered from interviews, document analysis and in-
formation observations. The mixed methods were used to see how the
environmental auditing practices flow, who the actors were and how the
actors played the roles in environmental auditing practices. The inter-
view methods were used to determine how the flows worked and how
the actors played their parts. The document analysis is used to examine
how the report is being prepared and how the result of the practices is
generated. The last method, observation, is used to get a clear picture
of the relationship between the role sender and focal person.
The interview session was conducted in dual language to get de-
tailed information about the process. The researcher used an interactive
interviewing stance in which the interviewer and interviewee can ask or
answer any question to or from each other (Tracy, 2013). The interview
sessions were started by asking the interviewee to answer tour types of
questions and describe the EA process (Tracy, 2013).
The researcher identified possible questions based on theories to fa-
cilitate the interview in a one-to-one setting; the interview duration was
between 30 and 45 minutes. The researcher formulated three differ-
ent sets of questions. Set A contains the interview question used for
internal auditors to explore the implementation of EAP in the organi-
sation. The full interview protocol is shown in Appendix 1. The second
set (Set B) of the interview questions was prepared for the auditees to
explore how they perceived the EAP (refer to Appendix 2). Set C was
arranged for councillors or members of the Audit Committee. This set
was designed to measure the extent of their involvement in EAP (refer to
Appendix 3).
The purpose was explained, and a consent form was given to the in-
terviewee before the researcher started the interview. The consent form
(as in Appendix 4) was given to inform the interviewee’s rights and
obtain the interviewee’s permission to audio-record the interview. The
rights include refusing to answer specific questions, requesting an un-
recorded interview session and stopping the discussion at any time. The
consent forms were collected and documented. The respondents gave a
copy of the signed consent forms for future reference.
Before the session, the researcher asked if any other parties were
involved in EAPso that arrangements could be made for interview ses-
sions with them. After each interview session ended, the researcher
transcribed the interview based on the audio recording. Then, the tran-
scribed data were sent to the interviewees for verification. After verifica-
tion, the data were sent to a licensed translator for translation purposes
— most data comprised a mixed language between Bahasa Malaysia and
English. The purpose of the translation was to ensure the translation
achieved the right content described.
Three different sets of questions were used to facilitate the session.
Set A contains interview questions asked to internal auditors to explore
the implementation of EAP in the organisation. Set B was prepared for
the auditees’ perceptions. Set C was arranged for the councillors or mem-
bers of the Audit Committee. After each interview session ended, the
researcher transcribed the interview based on the audio recording.
Table 1 shows the number of interview sessions with the two MLGs,
which differ due to the different approaches to implementing EAP.
Hence, ALPHA involved many interviewees due to its process of includ-
ing employees from other departments, which did not happen in BETA,
whereby the implementation of EAP was only being executed by the
internal audit department.
The second method for data gathering was document analysis. This
study gathered documents from various sources, including speeches, an-
nual reports, newspaper cuttings, Master Development Plan, and Strate-
gic Plan between 2017 and 2019 from both the MLGs. All documents
were accessible by the public except the master development plan. The
papers were used to see the pattern of instructions in written communi-

3
M.M. Jamil, N.H.Z. Abidin and N.M. Alwi Environmental Challenges 9 (2022) 100632

Table 2
List of Documents.

Local Governments Documents Justification

ALPHA • Annual Report • To understand the regulation and

• Speeches laws that bind the MLGs
• Newspaper Cutting • To obtain information regarding the
• Master Development Plan standards governing the EAPs 3
• Plan Strategic • To understand the formal
BETA • Annual Report organisation process, procedures and
• Speeches rules on the EAPs
• Newspaper Cutting • To understand the impact of the EAPs
on the organisation
• To find out any specific issue
regarding the EAPs being discussed
• To determine who is in control of the
EAPs for each stage
• To determine the role of each party in
the process

Table 3 ities Ordinance 1961 (Sarawak) for the State of Sarawak; Local Gov-
Informal Observation Sites. ernment Ordinance 1996 (Sabah) for the State of Sabah. The second
Date Location subgroup is a municipal council, which is the local government council
within an urban or town centre with a population exceeding 150,000
ALPHA
people and annual revenue exceeding RM20 million.
23 September 2016 Internal Audit Unit Office
22 December 2017 The main lobby of the ALPHA building
27 December 2017 Meeting Room A 4.1. ALPHA
27 December 2017 Meeting Room B
22 February 2018 Meeting Room C
ALPHA is situated in the northern region of Malaysia. It is headed
23 February 2018 Meeting Room D
22 December 2017 Meeting Room Audit Committee by the head known as Chairman. The ALPHA has six standards from
the International Standard of Organization (ISO), including ISO 14001,
BETA
22 March 2017 IAS Office a certification for the environmental management system. The ALPHA
27 March 2017 IAS Office management consists of two sections: the advisory section and the ex-
27 March 2017 Auditee 1 Office ecutive section. The advisory team consists of 24 councillors appointed
27 March 2017 Auditee 2 Office
by the state government. The role or function of the advisory team is
13 December 2017 Audit Committee 1 Office
27 January 2018 Audit Committee 2 Office
mainly to prepare the organisation’s policy. The senior management of
27 January 2018 Audit Committee 3 Office the MLGs selects the YDP. The EAP is headed by the Head of Internal
Auditors, the Head of Internal Audit Department and is assisted by mem-
bers from various departments.
cation regarding the EAP implementation. The followings are the docu-
ments that the researcher has reviewed.Table 2 4.2. BETA
The third data gathering process was in the form of informal obser-
vations. The researchers visited different offices, namely meeting rooms, BETA is a central region in Malaysia. The Chairman is the head of the
internal audit offices and lobby, in both MLGs. The purpose of the casual BETA administration. Similar to ALPHA, the Chairman acts as the CEO
statement was to observe responses when expectations were communi- of the organisation. However, the Chairman in BETA is appointed by
cated to others and how the directions were translated into actions. the State Administration and Diplomatic Officer (PTD). The Chairman
The findings from the observation are based on the displayed items is appointed for not more than two terms or four years. In other words,
on the notice board. For instance, both the MLGs showed the process the Chairman of BETA changed every four years. The position of Deputy
flow of EAP in the diagram to create an awareness of the practices. This Secretary, who is the assistant of the Chairman, must be held by a senior
researcher wrote notes on the informal observation of sites and took executive of the organisation. The environmental auditing practices are
videos or pictures of any related site materials. This exercise was reli- headed by the Internal Audit Department’s head and assisted by the
able for tacit knowledge, especially in explaining emotional expressions Internal Audit Department’s staff.
(Tracy, 2013). In this study, the researcher took notes in each location,
as stated in Table 3. 5. Findings
For data analysis, these data were uploaded in a qualitative soft-
ware analysis known as ATLAS.ti. This software analysis is helpful as it The data were analysed based on five stages of environmental audit-
enhances the reliability of the findings (Hwang, 2008). All interview re- ing practices by the authority department, namely establishing, imple-
sults, document analyses and observations were triangulated to support menting, monitoring, reviewing and improving the audit programme.
the data, provide comprehensive insights and answer the research ques- After the coding was identified, this study identified how governance
tions. In this study, the thematic analysis approach was used (Attride- influences the roles of internal auditors in every stage. The findings dis-
Stirling, 2001), and the data was divided into 50 codes. Then, the data cussion depicted five elements.
were arranged based on three main areas: characteristics of the role
sender, the focal person and the relationship between them. The next 5.1. Role authority
part gives an overview of the case study.
Role authority is the process of delegating authority and deliberat-
4. Local government authorities in Malaysia ing the instruction to the internal auditor to perform the process. The
highest authority of the Malaysian Local Government is the State Gov-
MLGs are regulated by the Local Government Act 1976 and Street, ernment, which issues instructions, including the appointment of the
Drainage and Building Act 1974 for Peninsular Malaysia; Local Author- councillors. The councillors of both organisations are appointed by the

4
M.M. Jamil, N.H.Z. Abidin and N.M. Alwi
representatives of the political parties that won a particular state elec-
tion. A unique feature for the appointment of the councillor in ALPHA
is the instruction to appoint the NGO Watchdog Group. In other words,
the roles of authority from the State Government are delegated to the
councillors to execute any policies approved by the State Government.
The councillors in this study can be regarded as the second-level
authority. The councillors in both organisations are the policymakers
who must prepare the policy and plan the programme. In 2014, the
State Government introduced the concept of the audit committee from
the private sector in BETA, and several councillors were appointed as
members of the audit committee, who have also monitored the audit
process in BETA.
The councillors delegate the authority to the Chairman, who in-
structs the staff members to execute the approved plan and programme.
This study also found that the authority level was a delegate from the
State Government to councillors and finally to the Chairman.
This study also found that the internal audit department’s structure
influences the internal auditors’ roles. In BETA’s case, the authority ex-
ists when the internal audit department is independent. The internal au-
ditors directly report the results of the audit programme to the Chairman
or Audit Committee. The reporting can be done without prior approval
from the management or other departments. Besides, they can perform
the audit procedures without any interference from other departments
and not bother with any criticism during the implementation of the au-
dit programme, as they simply focus on the specific tasks given by the
HIA.
The internal auditors have full power to perform these practices in
BETA without interfering with other departments. Audit Committee 1
said:
[…] As for Ms Y and her team, they do not bother if people do not like
them; they do their job
5.2. Roles of set’s latitude and resources
Based on the data gathered, it was discovered that resource alloca-
tion plays a role for internal auditors in executing the environmental au-
diting programme. The resource allocation depends on the tenure of the
Chairman. The frequency of the tenure of the highest authority might
influence how internal auditors perform their roles. The study found
that the tenure of the Chairman, the highest administration officer for
the organisations, influences the frequency of environmental auditing
practices.
In ALPHA, the current Chairman is appointed from the previous man-
agement executive of the organisation. However, in BETA, the State Pub-
lic Officer appoints the organisation’s Chairman. If the next successor of
the Chairman has the same plan as the current Chairman, the practices
are continued.
The audit documentation, such as the previous year’s audit working
papers, circulars and training, also function as the necessary resources
for the internal auditors to perform their roles in the practices. The inter-
nal auditors draft the documentation by referring to the previous year’s
audit programme as part of their references. In addition to that, the
agreed checklist provides the auditee with the required criteria for en-
vironmental auditing practices. The following statements demonstrate
the process:
[…] To conduct an audit, they [internal auditors] will explain their needs
and their checklists. They will consult me on matters that need audits. (Au-
ditee 3
[…] They have consulted me earlier on aspects they are about to moni-
tor, matters to be audited. So, they will conduct audits on the aspects stated
earlier. (Auditee 2)
[…] We will inform the purpose of audits, and once received by the au-
ditees, it will be easy for them to prepare audit objectives. We inform early
itself. (Internal Auditor 5)
Although the internal auditors have informed the auditees about the
gathering process of audit evidence, the internal auditors remain silent
5
Environmental Challenges 9 (2022) 100632
about the date of the spot check at the audit site in both MLGs to ensure
that the concept of independence remains intact. The following supports
the previously mentioned statement:
[…] I have to conduct a surprise check for a proper inspection. If staff
members are informed earlier, they may be prepared by wearing the equip-
ment. Following our SOP, we must inform a particular department that we
are coming for audits. Another procedure is more like a mystery, like a super-
market that gives mystery gifts; we usually go anytime to check to discover if
the staff are working correctly. If we were to wait for the audit, every process
and procedure would be ’cleaned’. 50% of the inspection must be in the form
of surprise checks. (Internal Auditor 2)
[…] We usually performed the surprise check in gathering the audit evi-
dence [showing report on the EAP for waste management]. We always per-
formed that [surprise check]. (Head of Internal Auditor 2)
The finalisation of the audit documentation is used as evidence for
the reviewing stage. The internal auditors carefully prepare the audit
documentation to maintain their independence by selecting significant
audit findings from their previous experiences or issues about the non-
compliance issues to be presented during the Review Meeting. The fol-
lowing statements support the preceding:
[…] During the inspection, if we find minor errors, we ask them to amend
them. As for significant errors, they will not be amended if we were not to
issue NCR (non-compliance). It has to be on the record; we know this based
on experience (Internal Auditor 2)
[…] During an audit, we will ask them to rectify small and trivial issues
on the spot and not create a fuss about it. Then we felt that if we did not
label at least an NCR, there would make no changes, and it had to be on
the record. We issue NCR for minor matters such as placing the document so
small matters can be resolved on the spot, within a few minutes, 30 minutes
or even an hour. It depends on our jurisdiction if the matters are serious or
not (Internal Auditor 3)
[…] Most of the time, we will meet the internal audit team at work; the
team does not look for mistakes done by colleagues but rather inform the
errors before others find them. The errors should be found by the internal
audit team (Auditee 5)
5.3. Roles of diversify
The unique governance in the environmental auditing practices is
the multiple roles diversified inside the ALPHA. Currently, ALPHA has
received five International Standard Certifications. The Head of the In-
ternal Auditor in ALPHA is in charge of any audit procedures and there-
fore, can integrate the roles of internal auditors into various standards.
In addition, the Head of the Internal Auditor in ALPHA also has a
solid team to perform the internal audit required by the National Au-
dit Department and other audit requirements. The team’s full support
can ensure that the duties are carried out successfully. The following
statement was given by the Head of the Internal Auditor in ALPHA:
[…] I am responsible for any jobs that comprise the word "audit". I am
the Head of the Internal Audit Unit and the Head of the Audit Secretariat.
5.4. Member variability
In ALPHA, the internal auditors are appointed from selected employ-
ees in various departments during the implementation of the audit pro-
gramme. Differences in the background may help the internal auditors
to speed up the process of auditing the environmental management sys-
tem. It also reduces any miscommunications between the members of
the audit team. Furthermore, Audit Secretariat can explain in detail the
process involved in their departments and improve clarity. Auditee 1
said:
[…] Each department needs to be visited to understand the workflow
process, certification, and health so it is easier to recruit people from that
department to ease their workload.
The statement of Auditee 1 was supported by the following statement
of Auditee 2:
M.M. Jamil, N.H.Z. Abidin and N.M. Alwi
[…] Once a new staff joins, like Ms L, needs to go to every department
to learn the workflow processes. It seems to be time-consuming. Recruiting
people from the other department is better as their workload is lighter.
5.5. Expectation strategist
The final reports are prepared by the Head of Internal Auditors based
on the expectations of the authority. In ALPHA, the authority is the ex-
pectations of the State Government, NGO and the Chairman. Meanwhile,
the authority of BETA includes the expectations from the State Govern-
ment, Audit Committee and the Chairman. Comparatively, the expecta-
tions from the authority between ALPHA and BETA are different due to
the jurisdictions of the State Government itself.
It is based on the written speeches by the Chairman in both MLGs
that emphasise each employee to fulfil the annual work plan they have
initially concurred. The followings are the statement to support the ear-
lier claim:
[…..] Each employee was obliged to fulfil the job description as stated in
the agreement when you are coming to report your duty. (Chairman, BETA)
[…] You are responsible for fulfilling your duty because you need to an-
swer why you cannot complete your duty in this world and hereafter. (Chair-
man, ALPHA)
6. Discussion and conclusion
It has been argued, based on Employing Functional Role theory, that
five criteria help internal auditors play their role in environmental audit-
ing programmes. The first criterion is the role of authority. The highest
authority for environmental auditing practices is the State Government,
which delegates the plan to the Councillors. The State Government’s pol-
icy that highly emphasises Green Projects helps the ALPHA to receive
the ISO 14001 Environmental Management Standards Certification. This
direction of the auditing process cascades to the internal auditors to per-
form the audit programme (Asaoluet al., 2016; Bananuka et al., 2018;
Schyf, 2000).
From the findings of this study, it was discovered that ISO 14001 fa-
cilitated ALPHA in performing the EAP for annual monitoring. It led to
continuous monitoring of the outcome of the environmental programme
instead of reacting to complaints, as portrayed in BETA. It was also found
that the audit programmes in ALPHA were established through the con-
sensus of multiple level stakeholders, including suggestions from the
NGO Watchdog Group. The independent party played the role of author-
ity in ALPHA. The ALPHA created a particular post for the NGO Watch-
dog Group to participate in developing environmental programmes to
strengthen the relationship between both parties.
The results revealed a similar practice to the findings from previous
studies (Bananuka et al., 2018; Onumah & Krah, 2012; Schyf, 2000),
which found that the Audit Committee has the power to instruct the
implementation of the environmental audit programme. However, this
study found that the Audit Committee was more of a political-driven
appointment with no absolute power in setting up environmental pro-
grammes in BETA. It was found that the environmental auditing pro-
grammes established in BETA adopted the top-down approach, which
depended on the Chairman’s decisions. It may assist the MLGs in
strengthening the audit committee’s role in this organisation.
The BETA’s environmental auditing programme structures the inter-
nal audit department’s independence. Internal auditors are free to ex-
ercise their duty if they have direct reports to the higher management
(Asaolu et al., 2016; Bananuka et al., 2018; Schyf, 2000). It will help
the internal auditors to maintain their independence. This study also
explained the influence of budget on the internal audit departments
and concluded that some budget allocations were given to the inter-
nal auditors to exercise their roles. This finding agreed with the previ-
ous study regarding budget allocations (Asaolu et al., 2016; Onumah &
Krah, 2012; Usang & Salim, 2016; Schyf, 2000).
6
Environmental Challenges 9 (2022) 100632
The second criterion is the role of the set’s latitude and resources. The
training sessions and the previous audit documentation facilitate the in-
ternal auditors in performing the environmental auditing process. Simi-
lar to the previous studies, internal auditors may not execute their roles
efficiently without sufficient training (Onumah & Krah, 2012; Usang &
Salim, 2016). This study also found that previous documentation helps
the internal auditors to draft audit procedures and review the audit cov-
erage and the effectiveness of audit procedures. They may refer to the
documentation process of the audit procedures for further explanation.
The continuity tenure of the Chairman influenced the environmen-
tal audit programme. This study revealed that environmental auditing
practices would be effective if the Chairman was familiar with and un-
derstood the philosophy of adopting the ISO standards from the begin-
ning. It may help the organisation’s management concisely itemise the
environmental auditing process. The new Chairman may understand the
whole process after reviewing the documentation.
The Head of Internal Audit, who fulfils multiple functions in enhanc-
ing the roles of internal auditors in ALPHA, can integrate all the audit
procedures to reduce the workload of the internal auditors. Besides that,
the composition of the audit team influenced the role of internal audi-
tors. The ALPHA audit team comprised members from various depart-
ments, and the internal auditors played the role of member variability
(Fondas, 1994). Requiring the internal auditors to understand the en-
vironmental programme technical processes, the EAP was assisted by
the internal auditors with diverse backgrounds in running the execu-
tion smoothly across departments (Anuntaakalakul & Lamberton, 2007;
Moor & Beelde, 2005; Raman et al., 2008; Vinten, 1996).
Another advantage of having diverse background is that an internal
auditor can clarify specific issues with other internal auditors. This ex-
ercise is helpful for task interdependence amongst departments. The in-
ternal auditors in BETA consisted of members from the internal auditors
for BETA. The auditees would not be able to implement the suggestions
recommended by internal auditors because their practices are different.
Hence, it benefits the MLGs to form a dynamic group to perform the
effectiveness of environmental auditing programmes.
The last criterion reflects the audit findings reporting submitted to
the review committee in ALPHA, which involved the head of the audited
department in finding a solution to the identified issues. Such arrange-
ments may help the organisation find the solution as a team in ALPHA.
A limitation of this study is that it focused on the data between 2017
and 2019 only. Thus, future research may include recent years. The data
also focused only on two MLGs with unique characteristics. The study
may open another research on environmental auditing practices in dif-
ferent institutions and the effectiveness of the Audit Committee in MLGs.
Credit authorship statement
Muthyaah Mohd Jamil: Conceptualisation, Methodology, Formal
Analysis, Writing - Original Draft. Nor Hafizah Zainal Abidin: Val-
idation, Conceptualisation, Supervision, Writing - Review & Editing.
Norhayati Mohammad: Supervision, Methodology, Writing - Review
& Editing.
Funding
This author expresses her appreciation and thanks to the IAREF fund
[IAREF21-012-0036] for financially supporting this research.
Declaration of Competing Interest
The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influence
the work reported in this paper.
Data availability
The data that has been used is confidential.
M.M. Jamil, N.H.Z. Abidin and N.M. Alwi Environmental Challenges 9 (2022) 100632

Appendix

Appendix 1

SET A: INTERVIEW QUESTIONS FOR INTERNAL AUDITORS

Interview Protocol - Understanding the EAPs in Malaysian Local Governments

Time/Date of the Interview

Place/Department
Interviewee
Position of Interviewee
Years in Service
Contact Information
Research Objectives

Question Justification

1. Do you perform environmental auditing practices? To understand the flow of the EAP being implemented
2. To what extent the practice being conducted?
3. How many departments involved in environmental auditing practices?

1. Who initiates the EAPs? To have an in-depth understanding of EAP

2. Why does that department involve?
3. How do you conduct EAPs? Why do you do so?
4. Is there any standard do you follow?
5. If yes, why do you follow the standard?

1. What do you expect from the auditees? To understand how do internal auditors perceived the role of
2. What do you regard as the most important activity in EAPs? auditees in EAP
3. What is the impact of audit for environmental practices?
4. Please rank the impact of these practices, 1 is the lowest, 9 is the highest?

1. How do you perceive the roles of Councillors? To understand how do internal auditors perceived the role of
2. What is the task of Councillors? Councillors in EAP
3. Do you have the Audit Committee?
4. What do you expect from the Audit Committees?
5. Is the audit process conducted effectively? Why do you say so?
6. How happy are you with your interaction with auditee? Why do you say so?
7. How happy are you with your interaction with the Audit Committee?

Appendix 2

SET B: INTERVIEW QUESTIONS FOR AUDITEE

Interview Protocol - Understanding the Environmental Auditing Practices (EAPs) in Malaysian Local Governments

Time/Date of the Interview

Place/Department
Interviewee
Position of Interviewee
Years in Service
Contact Information

Question Justification

1. What do you feel about the EAPs? To understand the flow of the environmental auditing practice
2. When did the environmental auditing practices start in your department? being implemented
3. Do you receive any letter before the audit process?

1. How do you do preparation for the audit process? To have an in-depth process in each stage of environmental
2. How do you handle it? auditing practice
3. In that way, the auditing department help your environmental program?
4. What is the content of the letter?

1. What do you expect from the internal auditors in the environmental program? Why do you say so? To understand how do auditees perceived the role of internal
2. What if there is no internal audit function, what it is that you value most? auditors in environmental auditing practice
3. Is the environmental auditing differ with the traditional audit?
4. Do you think the internal auditor able to conduct the environmental auditing practices? Why do you
say so?
5. Is the internal auditor do a good job? Why do you say so?

1. What do you think about the involvement of the Audit Committee? To understand how do auditees perceived the role of
2. Why do you say so? Councillor in environmental auditing practice

7
M.M. Jamil, N.H.Z. Abidin and N.M. Alwi Environmental Challenges 9 (2022) 100632

Appendix 3

SET C: INTERVIEW QUESTIONS FOR COUNCILLORS/AUDIT COMMITEE

Interview Protocol - Understanding the Environmental Auditing Practices (EAPs) in Malaysian Local Governments

Time/Date of the Interview

Place/Department
Interviewee
Position of Interviewee
Years in Service
Contact Information

Question Justification

1. What are your roles as the Councillors? To understand how do councillors perceived their roles in
2. Are you Audit Committees? environmental auditing practice
3. What are your roles as Audit Committees?

1. What do you expect from the internal audit? To understand how do councillors perceived the role of
2. Why do you say so? internal auditors in environmental auditing practice
3. Are you satisfied with the involvement of internal auditor in the environmental program?
4. Why do you say so?
5. How do you perceive the current internal audit function?
6. Are the internal auditors doing the right job? Why do you say so?

1. What do you expect from the auditees? To understand how do councillors perceived the role of
2. Why do you say so? auditees in environmental auditing practice

1. When do you involve in environmental auditing practice? To understand how do the councillors involved in
2. What do you do? environmental auditing practice.
3. Are there any issues during the environmental auditing practice? Why do you say so?

Appendix 4

I volunteer to participate in a research project conducted by Muthyaah Binti Mohd Jamil from the International Islamic University
of Malaysia. I understand that the project is designed to gather information about the involvement of internal auditors in
environmental programs. The purpose of this interview is to gain insight into how internal auditors involved in environmental
programs. It includes how the auditing process being conducted in the environmental programs and challenges during the process
itself. My participation in this project is voluntary. I understand that I will not be paid for my participation. I may withdraw and
discontinue participation at any time without penalty. I understand that most interviewees in will find the discussion engaging and
thought-provoking. If, however, I feel uncomfortable in any way during the interview session, I have the right to decline to answer
any question or to end the interview. Participation involves being interviewed by Muthyaah Binti Mohd Jamil from the
International Islamic University of Malaysia. The interview will last approximately 30–45 minutes. Notes will be written during the
interview. An audiotape of the interview and subsequent dialogue will be made. If I feel uncomfortable for the dialogues to be
taped, I have the right to decline the audit tape while interviewing. I understand that the researcher will not identify me by name
in any reports using information obtained from this interview and that my confidentiality as a participant in this study will remain
secure. Subsequent uses of records and data will be subject to standard data use policies which protect the anonymity of
individuals and institutions. Faculty and administrators from my university will neither be present at the interview nor have access
to raw notes or transcripts. This precaution will prevent my individual comments from having any negative repercussions. I have
read and understood the explanation provided to me. I have had all my questions answered to my satisfaction, and I voluntarily
agree to participate in this study. I have been given a copy of this consent form.
Details of Interviewee:

Date
Name of Interviewee
Organization
Signature
Name of Interviewer Muthyaah Binti Mohd Jamil
Organization International Islamic University of Malaysia
Signature

8
M.M. Jamil, N.H.Z. Abidin and N.M. Alwi Environmental Challenges 9 (2022) 100632

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